In One Year,a Firm Increases Its Production by $9 Million

question 110

Multiple Choice

In one year,a firm increases its production by $9 million and increases sales by $8 million.All other things in the economy remaining the same,which of the following is true?

• A)GDP increases by $8 million and inventory investment decreases by $1 million.
• B)GDP increases by $9 million and inventory investment increases by $1 million.
• C)Inventory investment decreases by $1 million.
• D)GDP increases by $8 million and investment increases by $1 million.
• E)GDP increases by $17 million.

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Definitions:

Labor Rate Variance

The discrepancy between what labor actually costs and what was initially budgeted or considered as the standard labor cost.

Actual Results

The real outcomes or data obtained from an operation or process, often compared against planned or forecasted results.

Standard Cost System

A method of cost accounting that compares actual costs to predetermined standards, facilitating variance analysis to manage costs.

Standard Amount

The budgeted or pre-determined cost of materials, labor, and overhead that is used as a benchmark for actual costs.